It's a story as old as Legos. (Okay, maybe older.) Traditional ideas need applied imagination to remain relevant.
In 1947, a traditional wooden toy manufacturer in Denmark saw the possibility of using plastic injection molding to produce interconnected, hollow bricks. They got a patent. The rest is history … just not really. People initially hesitated to buy plastic toys. Wood and metal were traditional. At first, Legos did not sell very well.
Over time, however, Lego continued to innovate. They went on from plastic stones. They added gears, wheels, propellers – objects that would facilitate the creative aspect of children's fascination with movement. They added some people. Now children could build cities. They opened Legoland parks, where miniature worlds could come to life. Today, Lego sets are usually sold "model style" in boxes that suggest what to create. In children's hands, however, Lego components can add anything and it can not resemble the image on the box. Imagination gives the model. I see this with my 9-year-old grandson who has been obsessed with Legos since he was 2. He loves to put them together and create his own world that comes from his imagination, something new and unique.
If only we could all keep that level of imagination to drive innovation in our business life! Great innovators want to create something new and wonderful. With all the partners, solutions, technologies and data we have today ̵
In the realm of insurance, we talk a lot about innovation. Innovation is where it is. But are we slaves to our existing business model? Perhaps we should also return to our childhoods regularly and regain the idea that imagination is where innovation begins .
When you think about it, today's market space and product building can work much like Legos. What can we create with the help of hundreds of unique technologies, data sources, partners, processes and opportunities that lie ahead? Can technology and improved real-time data give us what we need to produce parametric insurance products? Can we use what we know about niche insurance for groups to produce on-demand value-added and use-based products? Will different partnerships create a new reach for growth?
For the insurance companies that are already in contact with the software and affinity insurance markets or those who are considering software and affinity products – can the imagination help to meet the market's opportunities in innovative ways?  Last week, Majesco released its latest thought leadership report, A Roadmap for the Future of Insurance: Programs and Affinity Businesses written in collaboration with the Professional Insurance Marketing Association (PIMA). In our report, we use PIMA's latest research initiative, Affinity 2030: Exploring Our Blind Spots for a Brighter Future in connection with Majesco's consumer survey 2020 to paint a picture of the possibility.
In today's blog, we will look at the possibility in the light of examples.
- Markets – How do insurance companies currently see program and affinity opportunities to meet the needs of today's markets? What examples can we find in the markets they are now trying to reach?
- Products – How do companies bring together the modern tools and components of product design to imagine and innovate new, non-traditional product offerings?  Our research highlights the new markets, products and partners that insurers, MGAs and brokers should actively strive to reach customers on their terms.
Let's first look at the partners that organizations are currently focusing on for affinity and program activities. From the research, the three best – traditional models – include associations (81%), professional organizations (65%) and employer groups – small (65%), large (58%) and the middle market (58%). The best traditional markets considered or in planning include loyalty programs (27%), non-profit charities and cause groups (27%) and special interest groups (23%). (See Figure 1.)
On the other hand, emerging markets are lower overall, but they are the largest under consideration. The top three currently used include Gig Economy groups (27%), service groups (19%) and two groups tied to third place with 15%, including health and fitness organizations and retail groups . However, the considered or in the planning include Gig Economy (35%), Internet groups (35%) and three that bind for third to 31%, including health and fitness organizations, retail groups and organized social media groups. This fits well with our results from last week's blog, where we theorized that although methods will change, the concept of community will always be a factor in program and affinity activities.
If organizations follow these plans, these emerging markets will jump ahead of many in the traditional market space – place leaders in a favorable position to drive growth and go far ahead of insurance companies that do not focus on affinity and program activities .
Figure 1: Traditional and new affinity / software markets are focused
Some imaginative and forward-looking insurance companies are moving to new markets with new partnerships that will accelerate the customer experience, expand distribution reach and improve the ability to buy seamlessly as needed. Examples are:
- HODINKEE, a well-known resource for all watches, formed the HODINKEE Insurance Agency, which enabled collectors to insure their watch collections online with Chubb. [ii] HODINKEE Insurance built a model and product that took the complexity of insurance, streamlined the process and eliminated paperwork via any digital device.
- John Hancock announced the integration of their Vitality program with Amazon Halo, enabling Hancock's Vitality customers to use the Amazon Halo Band to earn vitality points based on their daily efforts for a healthier lifestyle that should mean a longer life. [iii]
- Through State Farm, Ford vehicle owners will be able to choose the State Farms Drive Safe & Save program, which adjusts the premium to miles driven while rewarding safe and good driving behavior with potential discounts. Opt-in offers when needed are the key to belonging and program success.
These companies and others make the first impetus, bold strategic moves in partnerships and a growing ecosystem to expand their reach and presence to where their customers will
Current and new products for software and affinity insurance companies
As expected Most of the currently offered software and affinity products are traditional (92%) – lifetime, period, car or homeowner. However, many insurance companies currently offer embedded insurance (58%) with an additional 19% in consideration – which raises this to a potential of 77% as shown in Figure 2.
Embedded insurance is an extremely effective way to overcome the decades-long burden that has plagued the industry: Insurance is sold, not bought. Embedded insurance completely changes this paradigm because it is purchased as part of something else.
It was also encouraging that on-demand insurance is currently offered by 27% of companies with a further 35% in consideration – raising this to a potential of 62%. Only parametric is at an early stage, with 12% currently offered and another 15% considering, for a total of 27% potential.
Companies that establish partnerships and ecosystems to penetrate these markets build strong foundations for growth as the interest of consumers and SMEs and the desire for these products continue to grow.
Figure 2: Products offered and considered for affinity / program activities
Regarding the business areas they offer in affinity and program activities, the surveyed companies had a higher focus on offering L&A and group benefits compared to P&C Personal and Commercial . The top focus was on traditional L&A products at 88%, compared to 40% for P&C. Embedded insurance was second with L&A of 56% and P&C of 20% followed by on-demand products for L&A of 48% compared to 24% for P&C and 20% for L&A parametric products compared to 4% for P&C. (See Figure 3.)
Figure 3: Business lines for affinity / program company products offered and considered
Economic and demographic changes accelerate the demand for on-demand products and services and offer enormous growth opportunities. Insurers who do not experiment and offer these types of products will lose valuable time to establish strong partnerships to meet the growing demand for these products. Consider the following market statistics:
- Sharing economy revenues are expected to increase by 22 times between 2013 and 2025. [iv]
- The market size of use-based insurance could amount to $ 190 billion by 2026. [v]
With that growing market interest in on-demand and embedded products, how do insurers 'and brokers' plans to offer these products measure up? Are we imaginative enough?
We compared the responses of our most recent car and life insurance consumers with the results of this survey and found that there is a significant gap between what customers want and what companies offer. The effect of COVID is likely to increase interest in these products even higher, creating an even larger gap.
Innovative product offerings aimed at selling to groups
Some emerging leaders introduce new, innovative product offerings that focus on both common and unusual groups. Notice how each offer combines a little imagination with partnership and ecosystem thinking to meet an urgent but still previously unmet need.
- Global Parametrics / Arbol – Global Parametrics, a parametric and index-based disaster risk transfer company, partnered with Arbol, a technology-driven marketplace that uses blockchain and smart contracts to provide weather risk insurance to small coffee farmers in Costa Rica. [vi]
- Understory – Understory originally launched its Hail Safe product for car dealers in November last year but rolled it out to a significant number of additional states in April. The product's coverage is triggered with Understory's own hail sensor. Understory is collaborating with international weather risk manager MSI GuaranteedWeather to bring the product to market. [vii]
- Pandemic Protector – In collaboration with CJ Coleman & Company Limited, a leading broker in Lloyd and London, One80 introduced a non-damage business break insurance policy for loss of gross profit due to a epidemic and / or pandemic outbreak. The coverage is designed for companies in all sectors and sizes. With a low minimum premium, the tailored policy provides broad coverage with a flexible definition of epidemic trigger to meet the insured's tailored needs. [viii]
- Starr Gate – Starr Insurance launched a new type of general aviation policy that provides pilots who rent aircraft with unmatched flexibility for their insurance needs through high-definition underwriting and utility-based pricing with a tool which can also improve a pilot's skills. [ix]
on how ecosystems and partnerships can dramatically accelerate imaginative thinking by expanding capacity and channels. We go into detail and look at over 30 different channels that are both currently in use or are in the planning stages for some insurance companies. You do not want to miss the list and what we see as the most viable channel options. For a preview, you can read the details today by downloading A Roadmap for the Future of Insurance: Programs and Affinity Companies . You can gain further insights on trends in the program and affinity business by listening to our latest webinar, Power of the Insurance Niche Market: Program and Affinity Business is Hot Hot Hot a conversation with myself and PIMA Executive Director and industry expert, Ann Dieleman.
And finally, consider this quote from Theodore Levitt – “ Creativity thinks up new things. Innovation does new things. "[x] As we have noted in our report on strategic priorities from 2020, there is a growing gap between knowledge and action between leaders and followers (42%) and laggards (45)%), in adopting new partnerships. These leaders position themselves to gain market advantage before competitors make their moves.
What's your next move?
[i] https://www.success.com/15-inspirational-quotes-to-unlock-your-imagination/  [ii] Gomelsky, Victoria, "An Easier Way to Insure That Watch," New York Times, September 9 2020, https://www.nytimes.com/2020/09/09/fashion/watch-insurance- online.html
[iii] O & # 39; Donnell, Anthony, "John Hancock Integrates Amazon Halo With Vitality Program , "Insurance Innovation Reporter, August 28, 2020, https://iireporter.com/john-hancock-integrates-amazon -halo-med-vitalitetsprogram /
[iv] https://www.weforum.org/agenda/ 2019/01 / sharing-economy /  [v] "Use-based insurance market size to hit US $ 190 billion by 2026," Acumen Research and Consulting, https://www.globenewswire.com/news-release/2019/05/16/1826253 / 0 / en / Usage-based-Insurance-Market-Size-to -Hit-US-190-Bn-av-2026.html
[vi] Evans, Steve, “Global Parametrics puts NDF capacity behind Arbol- driven weather risk pilot, ”Artemis, 15 April 2020, https://www.artemis.bm / news / global-parametrics-puts-ndf-capacity-behind-arbol-powered-weather-risk -pilot /
[vii] Ben-Hutta, Shefi, "Understory launches hail insurance for car dealers in five new states," Coverager , February 13, 2020, https://coverager.com/understory-launches-hail- insurance for car dealers in five new states /
[viii] Moorcraft, Bethan, “One80 Intermediaries Launches Available Pandemic Protector Policy,” Insurance Business America, August 26, 2020, https://www.insurancebusinessmag.com/us/news/breaking-news/one80-intermediates- launches-pandemic-prector-policy-231807.aspx
[ix] "Starr Insurance Companies launch Starr Gate, First-Of-Its-Kind, use-based flight insurance for pilots who rent, "STARR Insurance Company Press release May 26, 2020, https://www.starrcompanies.com/news/starr-insurance-companies-launches%20starr % 20gate-first-of-its-kind-use-based-flight-insurance
[x] https: // ww w.wework.com/ideas/worklife/innovation-quotes